The Fed boosts its forecast for US economic growth this year

The Federal Reserve on Wednesday upgraded its forecast for US economic growth this year to 6.5 percent – a sharp rise from its December forecast – but still expects to keep its benchmark interest rate near zero through next year.

The United States Federal Reserve foresees the economy accelerating quickly this year but still expects to keep its benchmark interest rate pinned near zero through 2023, despite concerns in financial markets about potentially higher inflation. The Fed on Wednesday significantly upgraded its forecasts for growth and inflation. It now envisions the economy expanding 6.5 percent this year, up sharply from its previous projection in December of 4.2 percent. And it boosted its forecast for inflation by the end of this year from its previous estimate of 1.8 percent to 2.4 percent as the economy gains momentum. That level of inflation would finally surpass the Fed’s 2 percent annual target after years of ultra-low inflation. But the Fed foresees inflation falling back to 2 percent in 2022 and 2.1 percent in 2023.